India's representative body for the diamond and gem trade, the Gem & Jewellery Export Promotion Council (GJEPC), has appealed to the Government of India and the Reserve Bank of India to revise credit terms for exporters and importers in the gems and jewelry trade which has been badly affected by the Hong Kong protests last year and the subsequent recent novel coronavirus outbreak. Stating that “the gems and jewelry trade has huge exposure in terms of business with Hong Kong and mainland China,” and further noting that “almost 35-40% of the business from India is with these respective territories,” GJEPC Chairman Pramod Kumar Agrawal has asked the authorities to “consider giving leeway and time for credit facilities availed.”
In a letter to officials of the Reserve Bank of India, the Ministry of Finance and Ministry of Commerce, the GJEPC noted the extent of the nation's businesses with Hong Kong and China, saying the impact of the HK protests included delays in the clearance of parcels exported and an overall slowdown of trade. GJEPC said this has impacted the turnover and financial dealings with the traders based out of Hong Kong with India, the financial implications of which have led to delay in shipments and delay in receipt of export proceeds. “As if this was not enough," they write, "the breakout [sic] of coronavirus in mainland China and then further spreading to other countries has also led to the impact on the gems and jewelry trade in these regions.”
In short, “The trade foresees major imbalance in payments for the community dealing with various merchants in this part of the world,” said Agrawal. The GJEPC has therefore requested the authorities consider the following:
1. Giving leeway and time for credit facilities availed by exporters/importers for meeting their financial commitments. Extension of tenor should be permitted.
2. The LC, Packing Credit and bills outstanding for shipments to China or Hong Kong and for goods already exported for which payments are receivable from buyers in these regions, should be given at least six months of additional time to resolve the financial delinquencies.
3. Impact on classification of accounts under SMA category such as SMA 0, SMA 1 or SMA 2 for such exports should be suspended and additional time may be given in order to make good the same so that hardship and defaults can be avoided, and the situation can be overcome smoothly.
Appealing to the authorities to consider the current crisis as a “force majeure situation”, Agrawal said that speedy steps to resolve the matter would be beneficial to the trade fraternity.